University of Rochester
This paper examines contracts to coordinate the capacity decision of a vend or who has been hired by a client to provide call center support. A variety of contracts are considered, all based on the observations contracts used by one large vendor. The role of different contract features such as pay-per-time, pay-per-call, service level agreements on service rates and abandonment is also examined. The publisher shows how different combinations of these contract features enable client firms to better manage vendors when there is information asymmetry about worker productivity. In particular he focuses on how different contracts can coordinate by yielding the system optimal capacity decision by the vendor and consider how profits are allocated between the client and the vendor.